Introduction
The entire case study focuses on leadership and management strategies applied by Tesla. The current state of the chosen organization is characterized by certain positive aspects, including its well-developed vision, mission, goals, and competitive advantage strategies. In addition to focusing on recent innovations and customer services, the recommendations include product differentiation, consumer engagement, and investment in research and development. This project will explore Tesla’s achievements, SWOT analysis, Porter’s five forces, and recommendations to support a sustainable competitive advantage.
Current State of the Organization
Since its creation in 2003, Tesla has achieved a certain success as a company with strong leadership and management. It focuses on developing solar energy, energy storage, and electric automobiles (Perkins & Murmann, 2018). All employees follow the same vision statement to ensure the company creates the most compelling car products in the 21st century. Tesla’s mission is to promote the world’s transition to sustainable energy.
The current purposes include establishing the bar regarding corporate ethics and environmental consciousness, manufacturing emission-free electric cars, and lessening the toll related to the environment and the carbon footprints of its employees and customers. Tesla has introduced a strategic plan to break into the whole industry to make a small number of high-end, high-performance sports cars for the most important and exclusive people, like celebrities. The second strategy is to get more customers by offering a cheaper sedan that competes with any luxury product on the market. Finally, making a cheap, mass-produced vehicle helps reach the working class and promotes Tesla’s culture.
SWOT Analysis
Strengths
- Autopilot function.
- Innovation.
- New charging stations.
- Organizational value.
- Diversification.
Tesla was the first business to produce a car that ran only on electric power. The main idea was to enhance an autopilot function and the largest lithium battery in the world. The company implements new business model innovations to promote connectivity and support for users (Teece, 2018). Additionally, it was among the first to construct a network of charging stations and a can changer in case one was required. Innovation, organizational value, best products, and all-rounded delivery services are the major strengths of the company to maintain diversification and remain recognizable in the market.
Weaknesses
- Long-term debt.
- Patent challenges.
- Liquidity.
- Limited capacity.
- Futuristic ideas.
Major drawbacks cause the company to be at risk of performing poorly. They include long-term debt, which requires them to curtail or postpone spending and investment activity. The company does not pay a fee for patents, which may cause it to lose its competitive market advantage. It has concerns regarding liquidity, which is insufficient to keep up with the competition, and limited capacity, which leads to the production of a certain number of cars and difficulties in aiming for higher volumes (Teece, 2018). Finally, Tesla focuses mostly on futuristic products, and consumers cannot determine who they are and what they cost.
Opportunities
- Rapid market expansion.
- Sales expansion.
- Integration importance.
- Production costs.
- Expensive advertisement.
In addition to receiving support and funding from the government, its business is seeing rapid market expansion due to the increased demand for solar power and electric vehicles. Because the battery may be integrated into various items, the scope of the company’s offerings can be expanded. Sales expansion into a previously untapped market that has the potential to benefit from the introduction of a new product (Perkins & Murmann, 2018). Additionally, the company is working on creating its batteries to cut production costs, and the corporation is making less expensive advertisements.
Threats
- Competition.
- Research and development.
- Safety concerns.
- Liability lawsuits.
- Supply materials.
These possible risks keep the company from taking full advantage of all its possible benefits. First, there is much competition because there are so many competitors, like Toyota, Volkswagen, General Motors, Audi, Alfa Romeo, BMW, Peugeot, and Mercedes-Benz. Most of them put a lot of time and money into researching and developing electric cars. Safety concerns have led to liability lawsuits because some cars have been in accidents due to the autopilot feature (Perkins & Murmann, 2018). Product flaws can hurt the company’s reputation and bottom line, and these worries have led to the recall of some of the company’s cars (Perkins & Murmann, 2018).
Because changing the environment can take a long time, customers need to be educated enough to switch to electric cars. Prices of materials like steel, nickel, copper, and lithium-ion, which the company uses, change all the time. Since this is the case, the company may stop using these materials. Lastly, lithium-ion is a big cause for concern because it is very easy to catch on fire, which is a big risk.
Porter’s Five Forces for Tesla Company
Threats of New Entries
Tesla has successfully established itself as an industry leader even though the market for electric cars is still in its infancy as an enterprise. Nevertheless, there is a high risk of new competitors entering the market if existing car manufacturers increase their investments in the technologies behind electric vehicles (Teece, 2018). The threat would result in increased competition, putting much pressure on Tesla’s profitability.
Supplies’ Bargaining Power
Tesla relies on its suppliers to provide the company with the required components to continue manufacturing electric vehicles. Consequently, suppliers have a high degree of negotiation power because they can ask for higher fees in exchange for the services they supply (Thomas & Maine, 2019). The bargaining power can put the company at greater risk of losses or even bankruptcy, and leaders, together with managers, have to investigate the areas of improvement.
Bargaining Power of Buyers
Customers in the market for electric cars have a high amount of power to negotiate the price they are comfortable paying for the products. The situation is a consequence of the large number of various companies operating in the same industry (Teece, 2018). These obligations give Tesla more options to choose from when making purchases and enhance the possibility that customers can shop around and acquire the best value.
Competitive Rivalry
As a result of its competition with other automobile manufacturers who sell electric vehicles, the market for electric automobiles is characterized by a high level of fierce rivalry at an intense level. This decision results in a highly competitive environment for the market for electric cars (Thomas & Maine, 2019). It places much pressure on Tesla to continually develop and improve its products to keep its market share and keep up with its rivals.
Threat of Substitutes
Substitute products replace each other to offer a list of benefits for the company, but its level of threat is low for Tesla. The enterprise faces the possibility of alternative products, which influences price increases and earnings. Substitute products are comparable to the original yet cheaper or better. Many car manufacturing companies provide similar products but in different versions (Thomas & Maine, 2019). For example, BMW and Toyota are companies that act as substitutes for Tesla, creating additional threats and the necessity to improve competitive advantage strategies.
Competitive Advantage
Addressing the existing internal and external environments, Tesla continues supporting its competitive advantage and evaluating the existing threats and opportunities in the chosen business field. Following its strategy of developing unique products, Tesla has put a significant effort into developing and selling some of the most innovative and cutting-edge products. It includes the company’s technology for driverless cars, which many people consider the most sophisticated of any automobile manufacturer (Thomas & Maine, 2019).
Tesla has created a variety of battery technology to produce automobiles that are more fuel-efficient and electric vehicles that are more dependable. Another approach is related to its vision for the long term. Tesla focuses on the future of transportation as well as the future of the automotive industry. It has maintained concentration on the growth of the offered products and services with respect to the current climate change, environmental support, and the necessity to adapt to alternative energy technologies (Thomas & Maine, 2019). Because of its commitment to the long term, the company has been able to develop increasingly innovative products and services, giving it a competitive advantage over other competitors and analytics.
Recommendations of Strategies
There are various strategies that Tesla can employ to ensure it remains relevant in the market and maintain its competitiveness. Product differentiation is important for Tesla to keep putting its efforts into making products and services that are different from those of its competitors. It helps the company become known as the place to go for new products and services, which will give it a competitive advantage that will last. For this plan to work, Tesla needs to put money into research and development as well as design teams to keep making new and unique products. It should put much focus on quality and customer service (Perkins & Murmann, 2018).
Tesla should put most of its effort into ensuring that its products and services are the best they can be. It can be done by putting money into quality control, training people to give great customer service, and ensuring every client’s need and request are fulfilled. Customers will learn to trust the company and recognize it for its products’ quality and service level. This approach will give the company a long-term advantage over its competitors.
Tesla should use social media to do advertisements and market searches and build a stronger brand identity and get closer to its customers. This recommendation includes some changes in the company’s content and campaigns that focus on educating followers, getting them involved, and promoting new products and services. Customers will be more likely to recognize the company and trust the brand, which will give the company a long-lasting competitive advantage (Perkins & Murmann, 2018). It is important to point out that it should work with other companies. Tesla should make strategic partnerships with other companies to develop unique products and services that give customers more value than what Tesla is currently offering.
Sustainability of Recommendations
The implementation of recommendations can be done in many ways, such as by creating a consumer loyalty program. This approach can boost consumer engagement by recharging flexibility and supporting energy efficiency at a low cost (Perkins & Murmann, 2018). Tesla customers can receive incentives and discounts. Free charging, Tesla component discounts, and other incentives are possible. The idea is to include referral rewards or purchase points. Customer loyalty and repeat business could help Tesla keep its competitive edge.
Another sustainable decision is to constantly invest in research and development (R&D) and stay ahead. It could involve creating new items, technologies, or improvements. It entails researching new products and markets for customers to attract their attention and explain the reasonability of their choices (Teece, 2018). Finally, service enhancement and sustainability are critical strategic recommendations for Tesla to strengthen its customer service and maintain competitiveness.
It could involve offering online chat or phone help and training personnel in customer service. Better product and service information and individualized customer service are examples. Tesla should prioritize sustainability in terms of its products and services. The idea could involve investing in solar and wind power and boosting the car economy. It can develop new sustainable technologies and materials research and reduce its carbon impact (Thomas & Maine, 2019). These tactics can help Tesla stay ahead in the electric vehicle business and boost customer loyalty, engagement, and competitiveness.
Evaluation of Recommendations
There are several ways in which the success of the recommendations made for Tesla can be tracked and determined. The first step in evaluating whether or not a list of recommendations is successful is to focus on the firm’s overall performance. It is possible to track sales, earnings, market share, customer happiness, and other relevant key performance indicators (Thomas & Maine, 2019). In addition, success can be measured by analyzing the comments received from clients, business partners, and staff members who have put the advice into practice. Finally, the method for gauging a company’s level of success can be implemented to check shifts in the competitive landscape it faces and the overall performance of its primary rivals.
Tesla has established itself as a truly game-changing company in automobile manufacturing and related transformations. The development of electric vehicles and autonomous driving systems enhances the company’s success in leadership positions and customer services. Tesla is constantly breaking new ground as a significant force that never stops watching for its possible opportunities and dangers in the market and assessing the best decisions.
References
Perkins, G., & Murmann, J. P. (2018). What does the success of Tesla mean for the future dynamics in the global automobile sector? Management and Organization Review, 14(3), 471-480. Web.
Teece, D. J. (2018). Tesla and the reshaping of the auto industry. Management and Organization Review, 14(3), 501–512. Web.
Thomas, V. J., & Maine, E. (2019). Market entry strategies for electric vehicle start-ups in the automotive industry – Lessons from Tesla Motors. Journal of Cleaner Production, 235, 653-663. Web.